spinecenter.com

THOUSAND OAKS, Calif: A neurospine surgeon specializing in minimally invasive spine surgery believes opportunities abound for an atypical practice management model that links arthroscopic spine surgery clinics.

"We feel that we can provide unique practice management services, as well as equity infusion and significant expansion of ancillary services, for spine surgery practices," said John C. Chiu, MD, chairman and CEO of Minimally Invasive Surgery Corp., based here.

John C. Chiu believes the
arthroscopic spine surgery
market will undergo rapid
growth over the next decade.

Medical Development Company offers a twist on the traditional PPMC Theme

Renowned neuro-spine surgeon strives to add equity and ancillary services to spine surgery practices

  THOUSAND OAKS, Calif-John C. Chin, MD, believes there is a future beyond the "traditional" physician practice management company (PPMC) management model.

  A neuro-spine surgeon specializing in minimally invasive arthroscopic surgery of the cervical, thoracic and lumbar discs and laser endoscopic spinal discectomy, Chiu has seen the opportunities for a practice management and expansion model for clinics like his, and the future, he believes, looks promising.

"We feel that we can provide unique practice management services, as well as equity infusion and significant expansion of ancillary services, for spine surgery practces I " said Chiu, who is chairman and CEO of Minimally Invasive Surgery Corp., based here. By focusing on spine surgeons' ability to direct comprehensive care services for patients requiring spine surgery, Chiu's company is helping surgeons improve their overall income.

Chiu Minimally Invasive Spine Surgery Inc. (CMIS), a subsidiary of Minimally Invasive Surgery Corp., serves as the practice operations and development division of the corporation. Chiu, who is chief of neurospine surgery at the California Center for Minimally Invasive Spine Surgery, said CMIS functions as a "practice equity expansion" (PEX) company specializing in the development of a national network of minimally invasive spine surgery and pain management/rehabilitation centers.

"The network will be built upon the foundation of these established surgical/medical and rehabilitation practices," he stated. "We will respond to the growing demand for minimally invasive spinal surgery, and (we) intend to establish CMIS as a leader in this field."

Using a "four-pillar" approach

Chiu said his public company strives to provide practice equity expansion based on four distinct care areas or "pillars": diagnostics, the outpatient surgical facility, rehabilitation and pain management.

"In the past, all of these aspects of care belonged to the hospital," Chiu stated. "Now, we want to bring those services into the spine surgeon's practice to form a cluster of services within one center. That way, the surgeon has more control regarding the overall spine care of the patient."

Income derived from these four "pillars" can potentially multiply the prior professional practice revenue. For example, for every $100 in physician's fees for a particular spine surgery case, the ancillary costs for that same case, on average, can total several hundred dollars, he said. When the spine surgeon can incorporate the diagnostic, rehabilitation, pain management and outpatient surgical facility fees into his or her own practice collections, the spine surgeon stands to make an additional income.

"Our job is to help surgeons organize these kinds of care centers in their office-based practice and prepare them to be medical directors of spinal care, not just surgeons," Chiu explained. "Most importantly, we want to see the spine surgeon take a greater role in outlining the overall care for the patient. This approach doesn't just benefit the physician, either. It's a win-win situation, for the patient and for investors as well."

One-stop services

Chiu said patients being seen for spine problems appreciate the "all-in-one" service delivery approach when they visit the clinic. "It makes it easy for the patient who can see the physician, and he or she directs the patient where to go and what to have done," he said. "It also makes it easier for the patient when he or she can go to the same clinic or office-based center and receive every service."

Chiu said Wall Street also likes his PEX approach because comprehensive regional specialty medical centers like his are efficiently run, and earnings for shareholders are drawn from the profits achieved by the ancillary or pillar services.

"Shareholders don't take their profits out of the physicians' share of the money," he said. "They aren't taking money that the physicians don't have, and that sustains growth for both the shareholders and the physicians."

Learning from others' mistakes

Chiu said he and his colleagues developed their PEX approach in response to the failures many of the larger multi-specialty and single-specialty PPMCs experienced over the past 18 months. According to Chiu, most of the PPMCs that have incurred significant financial losses have shared a problematic strategic game plan:

• Most PPMCs are typically very "top-heavy" with costs up front. According to Chiu, excessively large corporate management teams are often not cost-effective.

• Most management teams at PPMCs don't respond to what the doctors really want ftom the management arrangement. That's because the teams are headed by business professionals, not physicians, he said.

• Many PPMCs are also very debt-heavy. Chiu said many of these organizations started off with good intentions but got so deep in debt after acquiring practices that their income did not come in fast enough to pay off their expenses. When this happens, the management team and the physicians feel added pressure to perform. "It's' hard for the physicians to believe that the management company is truly putting their need for autonomy and their welfare as top priorities," Chiu said. Furthermore, many PPMCs charge a hefty management fee for their services, but bring little added value to the practices, he added.

"Our motto is that we don't touch the physicians' part of it; we maintain what they are doing and just add on as needed or recommended to improve their services and income," he said.

What's been most impressive to investors, Chiu added, is that his company focuses solely on the minimally invasive spine surgery practice market, thus enhancing its ability to target and affiliate with prime practice candidates.

"Our goal is to create a new system of comprehensive regional specialty medical centers, without walls and without beds," he explained. "We intend to grow by acquiring the assets of existing neuro and orthopedic spinal surgery practices and develop CMIS centers within these practices in conjunction with long-term management agreements."

He compared his management approach to "the ninja warrior, who is nimble and adjusts to change and adversity quickly, unlike the large sumo wrestler who carries a lot of weight but cannot move quickly or efficiently."

Chiu's company has already affiliated itself with three spine surgery practices in California, New Mexico and New York.

A growing market

Chiu believes his management/expansion model approach will continue to blossom as more spine surgeons, including orthopedic and neurosurgeons, become comfortable using an arthroscopic approach to spine surgery.

"With minimally invasive surgery, all our patients walk out of here in about two hours or so," he said. "Compared to the more invasive open spine surgery, there is practically no blood loss, it's less traumatic, psychologically it's a lot easier to recover from, there's very little scarring, and there's little risk of infection from AIDS, etc., due to blood transfusions. Patients practically always request the minimally invasive approach when they have a choice."

Add to that the fact that nearly 25% of all Americans experience back problems on an annual basis, and 5% have disabling back pain, out of which approximately 3% require some type of surgery, and there is a definite need for a cost-effective, minimally invasive approach to surgery, Chiu said.

Chiu, who chairs, the American Back Society-Committee on Surgery and American Academy of Minimally Invasive Spinal Medicine and Surgery, was instrumental in developing lasers to shift and reshape the disc in a process called laser thermodiscoplasty. He has since become a renowned international speaker on the subject.

Comparisons to knee arthroscopy

Currently, only 5% to 10% of spine surgery cases are treated using a minimally invasive approach because most spine surgeons are not trained in the minimally invasive technique. However, that will soon change, Chiu predicted.

According to a recent survey by the American Back Society, most of the group's members said minimally invasive surgery should be the first line of defense offered in treating patients requiring spine surgery. "We also feel that as many as 50% of all spine surgeries should involve some degree of minimally invasive surgery," Chiu pointed out. "One day, as many as 80% of all cases requiring spine surgery may be handled using a minimally invasive approach."

He compared the current market's potential with that of the knee arthroscopy market 20 years ago. "Back then, few surgeons were trained to do arthroscopic surgery for the knee, but that changed over time, and now it's a first-line procedure in a lot of cases," Chiu said. "Nowadays, if you don't do arthroscopic surgery (for the knee), you look like you're outdated. Someday soon, that's how minimally invasive spine surgery will be regarded.”

 

Chiu's California Center for Minimally Invasive Spine Surgery was designed to resemble a vertebral body.